Macy’s to sell $850 million senior notes in two parts on Wednesday

By Paul A. Harris

Portland, Ore., March 2 – Macy's Retail Holdings LLC plans to price $850 million of senior notes (Ba2/BB/BBB-) in two tranches in a Wednesday drive-by following a conference call with investors, according to market sources.

The offer features $425 million of eight-year notes talked to yield 6% to 6¼%, in line with initial guidance in the low-6% area, and $425 million of 10-year notes talked at 6¼% to 6½%, tight to initial guidance in the mid-6% area.

Books close at 2 p.m. ET on Wednesday, and the notes in both tranches are set to price thereafter.

The deal was half done in reverse inquiry, according to a bond trader, who added that both tranches were around two-times oversubscribed early Wednesday.

Credit Suisse Securities (USA) LLC is the left bookrunner. BofA Securities Inc., U.S. Bancorp Investments Inc., Wells Fargo Securities LLC, Fifth Third Securities Inc., PNC Capital Markets LLC and Goldman Sachs & Co. LLC are the joint bookrunners.

The eight-year notes come with three years of call protection. The 10-year notes come with five years of call protection. The first call premiums, in each case, are set at par plus 50% of the respective coupons.

The notes in both tranches feature three-year 40% equity clawbacks at par plus the full coupons and have 101% poison puts.

The Cincinnati-based retailer plans to use the proceeds plus cash on hand to redeem its 6.65% second-lien notes due 2024, its 2 7/8% senior notes due 2023, its 4 3/8% senior notes due 2023 and its 3 5/8% senior notes due 2024, and for general corporate purposes.

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